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EXHIBIT 10-2
[ESSENTUS LOGO]
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ESSENTUS SOFTWARE LICENSE AGREEMENT
THIS AGREEMENT WILL ENTER INTO EFFECT
UPON SIGNATURE OF BOTH PARTIES
McNAUGHTON APPAREL GROUP INC.
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ESSENTUS INTERNATIONAL INC.
Software License Agreement
Contents
1. Software License Agreement
2. Software License Terms And Conditions
3. Exhibit 1.3 - Software Applications
4. Exhibit 2.2 - Software Support Agreement
5. Exhibit 3.4 - Payment Schedule
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ESSENTUS INTERNATIONAL INC.
1430 Broadway, 14th Floor
New York, New York 10018
ESSENTUS SOFTWARE LICENSE AGREEMENT
The Licensee identified below ("Licensee") and Essentus International Inc.
("Essentus") have entered into this Software License Agreement (the "Agreement")
as of the Effective Date set forth below.
Licensee Name: McNaughton Apparel Group Inc.
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Billing/Notice Address: 463 Seventh Avenue
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New York, NY 10018
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Attn: Don George
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Telephone/Fax: (212) 947-2960 ext. 350
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Effective Date:
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Agreement Reference Number : L-
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This Cover Page and the attached Software License Terms and any duly initialled
Exhibits thereto (including without limitation Exhibit 1.3 - Licensed
Applications and Fees; Exhibit 2.2 - Software Support Agreement and Exhibit 3.4
- Payment Schedule) are incorporated into and made a part of this Agreement as
of the Effective Date set forth above. In the event the Effective Date is not
identified above, the Agreement shall be effective as of the last date of
signature of the parties hereto. Additional documents, schedules, exhibits and
addenda may be incorporated into and made a part of this Agreement upon the
written consent of the parties.
The parties hereby acknowledge that they have read and understand this Agreement
and all exhibits and addenda hereto, and agree to all terms and conditions
stated herein and attached hereto.
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ESSENTUS INTERNATIONAL INC.: LICENSEE:
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By: /s/ 'Scott Miller By: /s/ Amanda Bokman
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Name: Name:
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Title: Title:
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Date: Date:
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ESSENTUS INTERNATIONAL INC.
SOFTWARE LICENSE AGREEMENT
TERMS AND CONDITIONS
1. DEFINITIONS
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the expressions following shall have the
meanings indicated below:
1.1 "AGREEMENT" means this Essentus Software License Agreement,
including all exhibits and schedules hereto, and which may
hereafter be added hereto with the consent of Licensee and
Essentus.
1.2 "APPLICATION SPECIFIC THIRD PARTY SOFTWARE" means Third Party
Software license through Essentus which may solely be used by
Licensee in conjunction with the Essentus Software.
1.3 "DOCUMENTATION" means technical manuals and other
documentation relating to the use of the Software delivered to
Licensee with the Essentus Software by Essentus upon or
following execution hereof.
1.4 "EMPLOYEES" means employees, agents, subcontractors and
consultants of Essentus or Licensee, as the case may be.
1.5 "GRACE PERIOD" means the thirty (30) days following delivery
of the Essentus Software to Licensee.
1.6 "HARDWARE" means the computer hardware, peripherals and
operating system software provided by or for Licensee,
consisting of a single CPU or network of linked CPU's at a
single location.
1.7 "LICENSE" means the rights and licenses granted by Essentus
under Section 3.2.1, or 4.3.2, subject to the license
exclusions as set forth in Section 3.5.
1.8 "ESSENTUS SOFTWARE" means the software, that performs in
accordance with the Documentation and containing the Software
Applications listed on Exhibit 1.3. The Essentus Software
includes Documentation provided by Essentus.
1.9 "ESSENTUS SOFTWARE SPECIFICATIONS" means the system design
specifications for the Essentus Software. Title to copyright
in and all other rights to the Essentus Software
specifications are and remain with Essentus.
1.10 "SOFTWARE" means the Essentus Software and the Third Party
Software, collectively.
1.11 "THIRD PARTY SOFTWARE" means the third party software programs
referred to in Section 4.3 and identified on Exhibit 1.3
hereof, in object code format only, including any accompanying
documentation.
1.12 "WARRANTY PERIOD" means the sixty (60) day period commencing
after the Grace Period.
2. DESCRIPTION OF SERVICES PROVIDED BY ESSENTUS
2.1 Review of Essentus Software
2.1.1 System design review, training, installation
assistance, and software developments, if any, requested by
Licensee to the Essentus Software are not covered by this
Agreement and no obligations on the part of Essentus to do or
provide any of the foregoing by Essentus are to be implied by
this Agreement. In the event services are provided by a third
party, notwithstanding any Essentus recommendation, referral
or introduction, Essentus has no liability with respect to any
claims relating to or arising from any and all services
provided by a third party to Licensee.
2.1.2 While Essentus can deliver the Essentus International
Software prior to December 31, 1999, Essentus does not
represent or warrant that:
2.1.2.1 The Essentus Software remedies Year 2000
compliance issues that may otherwise affect
Licensee's computer or information systems; or
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2.1.2.2 Any of the services to the Essentus Software
described in 2.1.1 above can be provided in time to
resolve or remedy Year 2000 compliance issues that
may be affecting some of Licensee's current computer
or software information systems.
Licensee assumes the risks associated with 2.1.2.1 and 2.1.2.2
above and assumes full responsibility for ensuring that an
alternative plan is in place in the event that the Essentus
Software is not functional on Licensee's system in time for
potential Year 2000 related issues.
2.2 Software Support Services
2.2.1 Essentus will provide and Licensee agrees to accept
software support services, as described in Exhibit 2.2, in
consideration of the annual maintenance fee set forth in
Exhibit 2.2. Licensee will be provided with object code only
for any updates delivered to Licensee as part of the software
support services.
3. TITLE, LICENSE AND LICENSE FEES
3.1 Title and Risk for Loss
3.1.1 All rights, title and interest in the Software (other
than the rights of Third Party Software suppliers), and in any
updates, modifications, enhancements, and software
developments and additions thereto, as may be provided from
time to time by Essentus, as well as all copyright, patents,
trade secrets and other intellectual property rights therein,
shall remain with Essentus and all risk for loss prior to
delivery shall be borne by Essentus. The Software is supplied
by Essentus F.O.B. Essentus premises. Upon the delivery of the
Software to a common carrier, Licensee shall have all
responsibility for all risk of loss of, or damage to the
Software and shall arrange for all policies of insurance in
respect thereof. Nothing in this Agreement shall be construed
as transferring to Licensee any rights, title or interest in
the Software other than pursuant to the License granted
herein.
3.2 License
3.2.1 Provided Licensee is not in default, Essentus hereby
grants Licensee a perpetual, non-exclusive, irrevocable (save
in the case of default), non-transferable license, without
right to sublicense, to use the Software in object code
format, subject to the provisions of this Agreement.
3.2.2 Licensee may use the Software for as long as it
desires for its intended use within its own company on the
initial Hardware or, with the written consent of Essentus, on
any upgraded or replacement hardware. Licensee shall take all
reasonable steps to protect the proprietary nature of the
Software and shall not copy, disclose or allow use of the
Software or any part thereof for any purpose whatsoever other
than as is necessary in the performance of its normal
business. Licensee shall not:
3.2.2.1 permit any third party to use the Software;
3.2.2.2 use the Software in the operation of a
service bureau or to assist any third party.
All applicable patents, copyrights, trademarks, trade
secrets and intellectual rights in the Software and any
updates, modifications or enhancements made by Licensee or
Essentus are and shall remain the property of Essentus.
3.2.3 Licensee shall not sell, transfer, distribute,
market, rent, lease, publish, display or otherwise make
available the Software or Documentation to others. Licensee
agrees to secure and protect the Software and Documentation
and copies in a manner consistent with the maintenance and
protection of Essentus's rights therein and to take
appropriate action by instruction or agreement with its
Employees or others who are permitted access to the Software
and to each program or software application. All copies of the
Software made by Licensee and other programs developed,
including all corrections, modifications, improvements,
enhancements or derivatives of the Software made by or for
Licensee, translations, compilations and partial copies, as
well as all copyright, patents, trade secrets and other
intellectual property rights therein are the property of
Essentus. Licensee is permitted to make copies of the Software
for back-up and archival purposes only.
3.3 No Rights Prior to Payment
3.3.1 Notwithstanding the foregoing, Licensee shall have
no right to use, other than for purposes of testing and
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training, any component of the Software until it has paid for
such component in accordance with the provisions of this
Agreement.
3.4 License Fees and Limitations On Use
3.4.1 Licensee shall pay the License fees in the amounts
set forth in Exhibit 1.3, and at the times set forth in
Exhibit 3.4 hereto.
3.4.2 All amounts owed under this Agreement shall be due
and payable within thirty (30) days of the date of Essentus's
invoice other than the amounts stipulated in Exhibit 3.4,
Sections 1(a) and 2(a), which shall be due and payable upon
execution hereof. Overdue payments shall bear interest at the
lesser of one and one-half percent (1.5%) per month, or the
maximum rate allowed under applicable law.
3.4.3 Essentus reserves the right to include means within
the Software to limit Licensee's use of the Software to the
Licensed number of users. Licensee shall maintain records
regarding Licensee's use of the Software and shall make such
information available to Essentus upon request and such
records shall be subject to audit by Essentus on reasonable
notice to Licensee.
3.5 License Exclusions
3.5.1 Except as expressly authorized herein, Licensee shall
not:
3.5.1.1 reverse compile, reverse assemble,
disassemble, translate or otherwise reverse engineer
all or any portion of the Software;
3.5.1.2 disclose the results of Software performance
benchmarks to any third party without Essentus's
prior written consent;
3.5.1.3 use or permit the use of the Software by
more than the maximum number of users in respect of
which Licensee is paying License fees contemplated by
Exhibit 1.3.
4. GENERAL
4.1 Parallel Run
4.1.1 The installation of a new data processing system
requires that for each new application being
implemented, the old system be run in parallel until
such time that Licensee's management is satisfied
with the accuracy of the new system. It is the
responsibility of Licensee's management to satisfy
itself that the Software is satisfactory and suitable
for its business purposes before the Software is run
in a live environment. The period during which the
parallel runs take place creates an extra work load
on Licensee's staff and could result in overtime and
extra staff costs.
4.2 Internal Controls
4.2.1 It is Licensee's responsibility to exercise all the
internal control procedures required in a computer
environment. Internal control procedures must be
exercised over such areas as computer input, computer
output, segregation of duties, approval, etc.
Licensee acknowledges that internal control cannot
totally eliminate the possibility of fraud or
embezzlement.
4.3 Third Party Software
4.3.1 Third Party Software products are software products
other than those elements of software developed by
Essentus. Notwithstanding any Essentus
recommendation, referral or introduction, Licensee
will have sole responsibility for determining
suitability for use and obtaining proper license
rights of Third Party Software products. Essentus has
no liability with respect to any claims relating to
or arising from the use by Licensee of Third Party
Software or any other third party products or
software.
4.3.2 For certain Third Party Software licensed through
Essentus, Essentus grants Licensee a limited use,
non-exclusive, non-transferable License without right
to sublicense to use the Third Party Software within
its
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own company on the Hardware, which License licensee
hereby accepts. Essentus may, upon payment of
appropriate Third Party support fees as set forth in
Exhibit 1.3, billed on an annual basis, payable in
advance, provide first line technical support and
update services. This would include:
4.3.2.1 Distribution of software updates as may be
generally provided by the Third Party Software
supplier to supported licensees and, at an additional
fee, distribution of software upgrades available by
the Third Party Software supplier for its licensees.
Additional charges may be required for installation
of software or related services.
4.3.2.2 Assisting with problems with the Third Party
Software if they should occur and working with the
Third Party Software suppliers to attempt to obtain
corrections to these problems.
4.4 Substitutions and Modifications
4.4.1 Essentus reserves the right to make substitutions and
modifications to the Software that do not materially adversely
affect the performance of the Software.
4.5 Taxes
4.5.1 Licensee shall pay or reimburse Essentus upon demand
for any and all applicable state, federal, and/or local taxes
howsoever designated arising from or based upon the fees
charged by Essentus including any sales and/or use tax, value
added tax, property tax, (excluding only taxes based on
Essentus's taxable income) and related interest and penalties,
if any, imposed by any taxing authority at any time.
4.6 Confidentiality
4.6.1 Essentus and Licensee agree to treat and to cause
Essentus Employees and auditors and Licensee's Employees and
auditors respectively to treat as confidential any and all
information which they may communicate to one another from
time to time during the term of this Agreement regarding the
conduct of their respective businesses including but not
limited to the terms and conditions of this Agreement and any
Addendum, Amendment, Exhibit, Schedule and documentation
thereto and each of Essentus and Licensee undertakes not to
use for itself or disclose any such information to any other
person, firm or corporation.
4.7 Essentus Employees
4.7.1 Licensee agrees not to hire, directly or indirectly,
any Essentus Employees during the project or for a period of
one year after the last work is completed on the project. If
Licensee does employ, either directly or indirectly any such
individual, then in order to compensate Essentus for the costs
of training and acquiring such personnel, Licensee agrees to
pay to Essentus a fee equivalent to one year compensation of
the Essentus Employees so hired. Such sum will be by way of
liquidated damages and shall be due and payable upon the
termination of such person's employment or service with
Essentus.
4.8 Binding Effect
4.8.1 This Agreement shall be binding upon and shall enure
to the benefit of the parties hereto and their respective
heirs, representatives, successors, executors, administrators
and permitted assigns.
5. WARRANTIES AND LIMITATIONS OF ESSENTUS LIABILITY
5.1 Specific Warranties and Limitation of Warranties
5.1.1 EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 5,
ESSENTUS MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE
FOLLOWING WARRANTIES ARE IN LIEU OF THOSE ARISING BY STATUTE
OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF
TRADE.
5.1.2 Essentus cannot guarantee a specific result, an error
free system or a specific cost saving. Essentus does not
warrant that the operation of the Software will be
uninterrupted or error free or that all Software errors will
be corrected.
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Licensee agrees to assume these risks as to the result
including the responsibility for testing and implementing the
Software.
5.1.3 In the event that, during the Warranty Period, any
Essentus Software errors shall appear, provided such errors
are a deficiency of the Essentus Software to perform
materially in accordance with the Documentation. Essentus will
use commercially reasonable efforts to correct any such
deficiencies.
5.1.4 Essentus does not warrant the Software against faulty
performance due to operator errors, power failures, file
overflows, equipment malfunctions, failure of operating
systems, failure of compilers or interpreters, failure of
utilities or of software not authored (written) by Essentus or
any other causes beyond the reasonable control of Essentus.
Licensee shall pay Essentus's standard rates for services
performed by Essentus to correct such data and/or program
defects.
5.1.5 The responsibility of Essentus under this Agreement
shall be limited to commercially reasonable efforts to correct
program defects in the Essentus Software if informed of
defects by Licensee during the Warranty Period. Any claim by
Licensee that a defect exists in the Software shall not excuse
Licensee from the performance of its obligations under this
Agreement.
5.1.6 ESSENTUS DISCLAIMS ANY AND ALL LIABILITY FOR
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING LOSS
OF PROFITS, REVENUE, DATA, OR USE INCURRED BY LICENSEE OR ANY
THIRD PARTY ARISING OUT OF THE USE OR OPERATION OF THE
SOFTWARE PROVIDED TO LICENSEE WHETHER IN AN ACTION FOUNDED IN
CONTRACT, TORT OR OTHERWISE, EVEN IF THE OTHER PARTY OR ANY
OTHER PERSON HAS ADVISED ESSENTUS OF THE POSSIBILITY OF SUCH
DAMAGES. ESSENTUS'S LIABILITY FOR DAMAGES HEREUNDER FOR ANY
CAUSE WHATSOEVER SHALL IN NO EVENT EXCEED THE AMOUNTS RECEIVED
FROM LICENSEE WITH RESPECT TO THE PARTICULAR SOFTWARE MODULE
WHICH GIVES RISE TO THE LIABILITY OR IN THE AGGREGATE, THE
AMOUNTS RECEIVED BY ESSENTUS FOR THE ESSENTUS SOFTWARE. THE
FEES PROVIDED FOR THIS AGREEMENT REFLECT THE ALLOCATION OF
RISKS AND THE LIMITATION OF LIABILITY SPECIFIED HEREIN WHICH
BOTH PARTIES HEREBY AGREE TO.
5.1.7 If Licensee without the written consent of Essentus
makes any modifications to the Software or any deviations from
the operating instructions, all warranties set forth herein
cease immediately. In addition, Essentus's support as set
forth in Exhibit 2.2 shall only apply to unaltered or original
Essentus Software as may be up dated, modified or altered only
by Essentus.
5.1.8 Essentus assumes no responsibility regarding the
purchase, configuration, operation, performance or maintenance
of the Hardware purchased or in use.
5.1.9 Essentus warrants that it is the owner of the
Essentus Software and has the right to License the Software to
Licensee (subject to the rights of Third Party Software
suppliers). Licensee shall give Essentus prompt notice of any
claims that the Software infringes any patent, copyright or
trade secret ("Infringement Claim"). If so notified, Essentus
shall, at its expense, defend any action brought against
Licensee to the extent that it is based on an Infringement
Claim arising from Licensee's use of the Software within the
scope of this Agreement. In the event that the Software
becomes, or in Essentus's opinion is likely to become, the
subject of an Infringement Claim, Essentus may either
5.1.9.1 procure for Licensee the right to continue
using the Software free from any such claims;
5.1.9.2 replace or modify the Software to make the
Software non-infringing, or
5.1.9.3 if neither 5.1.9.1 or 5.1.9.2 is
commercially reasonably available to Essentus,
require Licensee to discontinue using the infringing
Software upon thirty (30) days written notice
provided Essentus refunds to Licensee the then
present value of all amounts paid by Licensee with
respect to the infringing Software, as amortized over
a forty-eight (48) month life.
If the Infringement Claim relates to Third Party Software not
licensed through Essentus, Essentus shall have no liability
whatever as regards such Third Party Software.
The foregoing states Essentus's entire liability with respect
to any Infringement Claim.
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6. TERMINATION
6.1 Events Giving Rise to Termination
6.1.1 Either party may immediately terminate this Agreement
and shall have no further obligations to the other party under
this Agreement other than the obligations of Licensee to make
all payments contemplated hereby to Essentus, if any one of
the following events shall have occurred and provided such
termination is permitted by law.
6.1.1.1 A party shall fail to observe or perform any
material covenant or agreement contained in this
Agreement and such party does not cure such failure
within the one hundred and twenty (120) day period
after written notice thereof has been given to that
party by the other party;
6.1.1.2 The other party:
6.1.1.2.1 is dissolved;
6.1.1.2.2 becomes insolvent or fails or is
unable or admits in writing its inability
generally to pay its debts as they become
due;
6.1.1.2.3 makes a general assignment,
arrangement or composition with or for the
benefit of its creditors;
6.1.1.2.4 institutes or has instituted
against it a proceeding seeking a judgement
of insolvency or bankruptcy or any other
relief under any bankruptcy or insolvency
law or other similar law affecting
creditors' rights, or a petition is
presented for the winding-up or liquidation
of such other party and, in the case of any
such proceedings or petition instituted or
presented against it, such proceeding or
petition
a) results in a judgement of
insolvency or bankruptcy or the
entry of an order for relief or
the marking of an order for the
winding-up or liquidation of such
other party, or
b) is not dismissed, discharged,
stayed or restrained in each case
within thirty (30) days of the
institution or presentation
thereof;
6.1.1.2.5 has a resolution passed for its
winding-up or liquidation;
6.1.1.2.6 seeks or becomes subject to the
appointment of an administrator, receiver,
trustee, custodian or other similar official
for it or for all or substantially all its
assets (regardless of how brief such
appointment may be, or whether any other
event described in this Section 6.1.1.2.6
has occurred and is continuing;)
6.1.1.2.7 has any event occur to it with
respect to such other party which, under the
applicable laws of any jurisdiction, has an
analogous effect to any of the events
specified in Sections 6.1.1.2.1 to 6.1.1.2.6
(inclusive); or
6.1.1.2.8 takes any action in furtherance
of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing
acts.
6.1.2 Upon termination of this Agreement by Essentus
pursuant to Article 6, Licensee shall discontinue all use of,
and promptly return all copies of the Software and
Documentation in Licensee's possession.
6.1.3 Notwithstanding any termination of this Agreement,
the following Sections shall continue to apply: Sections
3.1.1, 3.2.3, 4.5.1, 4.6.1, 4.7.1, 4.8.1 and Article 5.
7. MISCELLANEOUS
7.1 Notices
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7.1.1 Any notice or other communication required or
permitted in this Agreement shall be in writing and shall be
given by certified mail, or in person to the address set forth
on the cover page of this Agreement.
Such notice shall be deemed effective on the day of delivery
if delivered in person, or on the third day after being placed
into the mails if given by certified mail.
7.2 Integration
7.2.1 This Agreement, including the Exhibits and any
Schedules hereto, constitutes the entire Agreement between the
parties with respect to the subject matter hereof and
supersedes all prior proposals, negotiations, conversations,
discussions, and agreements between the parties concerning the
subject matter hereof.
7.3 Conflict and Exhibits
7.3.1 Except as otherwise provided, in the event of a
conflict between the provisions of any Exhibit and the
provisions set forth in the body of this Agreement, the
provisions of the body of this Agreement shall prevail unless
the Exhibit specifically indicates that the provision in the
Exhibit should control and such Exhibit is signed by both
parties.
7.4 Amendments
7.4.1 No amendment, modification, termination or waiver of
any provision of this Agreement, nor consent to any departure
therefrom, shall be effective unless the same shall be set
forth on a separate document in writing, executed by
authorized representatives of both parties, and then such
waiver or consent shall be effect only in the specific
instance and for the specific purpose for which given.
7.5 Applicable Law
7.5.1 This Agreement shall not be governed by the
provisions of the 1980 United Nations Convention on Contracts
for the International Sale of Goods. Rather this Agreement
shall be governed by the laws of the State of New York.
Subject to Section 7.6. Any legal proceedings arising out of
or relating to this Agreement shall be brought in the state
courts located in Manhattan County or in the federal district
courts for the Southern District of New York.
7.6 Arbitration
7.6.1 Any controversy or claim arising out of or relating
to this Agreement shall be submitted to arbitration before an
arbitrator agreed upon by the parties, or if the parties
cannot agree upon an arbitrator within thirty (30) days, to
three arbitrators selected by the American Arbitration
Association. Notwithstanding the foregoing, however, the
parties agree that either party may seek injunctive or similar
indirect relief pending such arbitration from any court of
competent jurisdiction as may be appropriate. The site of the
arbitration shall be New York, New York, and the arbitration
shall be conducted under the rules then prevailing of the
American Arbitration Association. The arbitrators may award
attorney's fees and costs as part of the award. The award of
the arbitrators shall be binding and may be entered as a
judgement in any court of competent jurisdiction.
7.7 Invalidity
7.7.1 If any provision or portion of this Agreement is held
to be invalid under any applicable statute or rule of law it
is to that extent to be deemed to be severable and omitted and
the remainder of this Agreement shall continue in full force
and effect.
7.8 Waiver
7.8.1 No waiver of any breach of this Agreement shall
operate as a waiver of any similar subsequent breach or any
breach of any other provision of this Agreement.
7.9 Force Majeure
7.9.1 Neither party shall be liable or deemed to be in
default for any delay or failure in performance under this
Agree-
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ment or interruption of service resulting directly or
indirectly from Acts of God, civil or military authority, acts
of public enemy, war, riots, civil disturbances, accidents,
fire, explosions, earthquakes, floods, the elements, strikes,
lockouts, labor disturbances, shortages of suitable parts,
labor or transportation, delays caused by suppliers,
telecommunications, courier or postal failure or interruption
or any other cause beyond the reasonable control of such
party.
7.10 Export
Licensee shall not export or re-export the Software or
Documentation except in compliance with United States export
laws and regulations.
7.11 Reference
Licensee agrees upon signing of this Agreement to assist
Essentus in marketing events such as site visits, reference
calls and customer testimonials and hereby authorizes Essentus
to identify Licensee by its corporate name, verbally or in
written material, as a client of Essentus.
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EXHIBIT 1.3
ESSENTUS SOFTWARE APPLICATIONS
TO BE LICENSED AND FEES
LICENSEE McNaughton Apparel Group Inc.
APPLICATION LICENSE FEES (as per Application Features of "Proposal")
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APPLICATION LICENSE FEES 250 Named Users
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A) SUCCESS SOURCING
1) Purchase Order Control and Reporting, In-Transit Processing - Receiving
2) Source Order Module
3) Planning
4) Contract Order Processing and Reporting
Initial Sourcing License Fee $200,000
SUB-TOTAL SOURCING $200,000
B) SUCCESS DEMAND MANAGEMENT
4) Sales Order Processing
5) Sales Order Allocation
6) Return Merchandise Authorization (RMA)
Initial Demand Management License Fee $200,000
SUB-TOTAL DEMAND MANAGEMENT $200,000
PER NAMED USER FEE: 250 USERS @ $2,400 $600,000
GRAND TOTAL SOURCING/DEMAND MANAGEMENT $1,000,000
LESS TRADE-IN ALLOWANCE $300,000
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NET TOTAL SOURCING & DEMAND MANAGEMENT $700,000
C) INTERFACE LINKS PER MODULE
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14) Financial Systems $30,000
15) Warehouse Management Systems $30,000
GRAND TOTAL INTERFACE LINKS $60,000
LESS TRADE IN ALLOWANCE $60,000
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NET TOTAL INTERFACE LINKS $0
NOTE: The links are generic interfaces providing staging table
capability. A complete integrated system requires additional
services from Essentus and possibly third parties that must be
evaluated on a case-by-case basis.
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D) EDI (ELECTRONIC DATE INTERCHANGE)
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Demand Management Transactions
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25) Purchase Orders (850) $15,000
- Inbound interface module required for first trading partner
26) Invoice (810) $15,000
- Outbound interface module required for first trading partner
27) Advance Ship Notice (856) $15,000
- Outbound host integration module (pick/pack and manifest)
28) Price/Sales Catalog (832) $15,000
- Outbound catalog service
29) Organizational Relationship (816) $15,000
- Inbound interface module required for first trading partner
30) Purchase Order Change (860) $15,000
- Inbound validation and listing (no automated interface)
31) Product Activity Data (852) $15,000
32) Order Inquiry (869) $15,000
33) Order Status (870) $15,000
34) EDI Text Transaction (864) $15,000
Configuration to connect with each third party network or direct connection is
done on a time and material basis.
GRAND TOTAL EDI $150,000
LESS TRADE-IN ALLOWANCE $150,000
========
NET TOTAL EDI $0
TOTAL A-D $700,000
E) THIRD PARTY SOFTWARE LICENSES
Oracle and optionally Business Intelligence would have to be purchased for
each computer utilising the Essentus software. Business Objects is a
decision support Ad Hoc query application. The license fees vary depending
on number of PC's or Oracle on the number of named users and could be as
follows:
ORACLE SOFTWARE LICENSES
Oracle licenses would have to be purchased for each "server" and "client"
utilizing the Essentus Software. The license fees vary depending on the
number of named users and the model of the hardware.
Single Server Application Specific Enterprise Licenses for 250 Named $100,000
Users at $400 per user (165 of these licenses will be delivered and
paid for following Licensee's payment of the amount due on the Balance
Date referred to in Exhibit 3.4 to the License Agreement, subject to
price adjustment by Oracle). Single Server Application Specific Standard
Edition Licenses for 15 Named Users at $110 per user. $1,650
TOTAL ORACLE LICENSES $101,650
</TABLE>
--------------------------------------------------------------------------------
Page 2 of 4
<PAGE> 14
Front line Oracle support is provided through Essentus on an annual basis,
at 16% of the list price per year, subject to price adjustments by Oracle.
FINAL ORACLE PRICING TO BE CONFIRMED AFTER HARDWARE PURCHASE
<TABLE>
<S> <C>
SUCCESS BUSINESS INTELLIGENCE
35) Standard with Essentus SUCCESS Included
- Essentus' Predefined Reports
- Driller capability to view standard reports and drill down with
multiple views (named users)
- 1 BO Supervisor to manage security
- 1 BO Document Agent Server (Windows NT)
- 1 BO Designer
- Essentus Universe(s)
(5 bundles to be delivered following Licensee's payment of the
amount due on the earlier of 45 days after the Miss Erika
implementation or December 31, 2000.)
36) Standard BI Advisor Module - Full Use License
- 10 BO End User Bundles (Reporter plus Explorer) @ $5,925 ea.
(5 of these bundles will be delivered following Licensee's
payment of the amount due on the earlier of 45 days after the
Miss Erika implementation or December 31, 2000.) $59,250
Annual support will be 20% of the list price per year, subject to
adjustments by the third party licensor
SUBTOTAL BUSINESS INTELLIGENCE $59,250
SUB-TOTAL THIRD PARTY SOFTWARE $160,900
GRAND TOTAL ALL LICENSES $860,900
F) ESSENTUS BI ADVISOR
OPTIONAL BI ADVISOR ENHANCEMENTS
- Additional copies of BO Reporter
- Additional copies of BO Explorer $595
- Additional copies of End User Bundles (5 User Increments) $695
- Additional copies of BO Supervisor $5,950
- Additional copies of BO Designer $1,995
- Additional copies of IS Bundle (Supervisor plus Designer) $1,995
- Additional copies of BO Document Agent Server for Unix $3,495
- Additional copies of BO Document Agent Server for NT $7,995
- BusinessMiner $4,995
- BusinessQuery $4,995
- Additional copies of BO Driller $150
(Annual Support 20% of list price per annum) $350
</TABLE>
G) ESSENTUS SERVICES
Essentus Services for Systems Design Review, Training, Conversion and
Other Implementation Support Services.
During the initial phase of the project, we will work with your project
team to develop a specific project plan defining the training,
implementation, conversion plan and the estimated cost associated with
each phase of the plan.
--------------------------------------------------------------------------------
Page 3 of 4
<PAGE> 15
<TABLE>
<S> <C>
H) ESSENTUS MAINTENANCE
FIVE YEAR MAINTENANCE -
---------------------
BASED ON LICENSE FEES OF $1,210,00 @ 16% PER ANNUM ($193,600 PER YEAR) $968,000
PAYABLE ANNUALLY.
I) FEE SCHEDULE
</TABLE>
Time spent will be charged at our current prevailing per diem rates.
Effective to December 31, Hourly 2000, based on an 8 hour day, they are as
follows:
<TABLE>
<CAPTION>
Reg. Hourly Disc. Hourly
----------- ------------
<S> <C> <C>
- Project Manager $350 $295
- Lead Business Analyst $300 $275
- Intermediate Business Analyst $225 $175
- Senior Technical Analyst $225 $225
- Data Base Administrator $225 $225
- Training $300 $250
- Senior Business Analyst $275 $275
- Business Analyst $150 $150
- Technical Analyst $200 $200
- Software Development Manager $225 $225
- Senior Software Developer $200 $200
- Intermediate Software Developer $175 $175
- Software Developer $150 $150
- Technical Installation Analyst $200 $200
- Executive $350 $350
</TABLE>
J) TRAINING SERVICES
Essentus offers education classes per the Essentus Course Catalog.
<TABLE>
<S> <C>
a) Training conducted at a Essentus site $350 per student day
$2,400 per day
(First 8 students)
b) Training conducted at a client site $250 per additional
student (max. 12)
K) RECOMMENDED STAFF REQUIREMENTS
1) Database Administrator (in-house or out-sourced)
2) MIS Administrator
Initials
----------------------------------
----------------------------------
</TABLE>
--------------------------------------------------------------------------------
Page 4 of 4
<PAGE> 16
EXHIBIT 2.2
[ESSENTUS LOGO]
creating value at web speed
ESSENTUS SOFTWARE SUPPORT AGREEMENT
McNAUGHTON APPAREL GROUP INC.
<PAGE> 17
ESSENTUS INTERNATIONAL INC.
Software Support Agreement
Contents
1. Essentus Software Support Agreeement
2. Terms and Conditions
3. Schedule "A" - Software Included In Support Agreement
4. Schedule "B" - Standard Per Diem Rates
--------------------------------------------------------------------------------
Page 1 of 1
<PAGE> 18
ESSENTUS INTERNATIONAL INC.
1430 Broadway, 14th Floor
New York, New York 10018
ESSENTUS SOFTWARE SUPPORT AGREEMENT
The Licensee identified below ("Licensee") and Essentus International Inc.
("Essentus") have entered into this Software Support Agreement (the "Agreement")
as of the Effective Date set forth below.
Licensee Name: McNaughton Apparel Group Inc.
------------------------------------------
Billing/Notice Address: 463 Seventh Avenue
------------------------------------------
New York, NY 10018
------------------------------------------
Attn: Don George
------------------------------------------
Telephone/Fax: (212) 947-2960 ext. 350
------------------------------------------
Effective Date:
------------------------------------------
Agreement Reference Number: M-
-------
This Cover Page and the attached Software Support Agreement Terms and Conditions
are incorporated into and made a part of the Essentus Software License Agreement
as of the Effective Date set forth above. In the event the Effective Date is not
identified above, this Agreement shall be effective upon expiration of the Grace
Period identified in the License Agreement.
The parties hereby acknowledge that they have read and understand this
Agreement, and agree to all terms and conditions stated herein and attached
hereto.
<TABLE>
<S> <C>
ESSENTUS INTERNATIONAL INC.: LICENSEE:
By: /s/ Scott D. Miller /s/ Amanda Bokman
-------------------------------------------- -----------------------------------------
Name: Name:
-------------------------------------------- -----------------------------------------
Title: Title:
-------------------------------------------- -----------------------------------------
Date: Date:
-------------------------------------------- -----------------------------------------
</TABLE>
--------------------------------------------------------------------------------
Page 1 of 1
<PAGE> 19
ESSENTUS INTERNATIONAL INC.
SOFTWARE SUPPORT AGREEMENT
TERMS AND CONDITIONS
1. DEFINITIONS:
1.1 "Current Release" means the then-current release of Software
for use in a particular Operating Environment.
1.2 "Error" means an error in the Software that significantly
degrades the use of the Software.
1.3 "First Line Support" means assisting Licensee in determining
whether the Error resides in the Licensed Software (including
corrections done by Essentus).
1.4 "Fix" means the repair or replacement of object or executable
code versions of the Software to remedy an error.
1.5 "Hours of Operation" means Monday through Friday (excluding
Essentus holidays), 8:00 AM to 9:00 PM (EST).
1.6 "Previous Releases" means the release of Software for use in a
particular Operating Environment which have been replaced by
the Current Release in the same Operating Environment.
1.7 "Software" means the Essentus Software described in Schedule
"A".
1.8 "Telephone Support" means Software technical support telephone
assistance provided by Essentus to the primary technical
support contact during Essentus' Hours of Operation concerning
the use of the Current Release and the Previous Releases (as
applicable).
1.9 "Updates" means one (1) copy of all published revisions and
corrections to the printed System Design Specifications and
one (1) copy of corrections and new releases of the Software
which are generally made available to Essentus' supported
licensees at no additional cost. Updates shall not include any
options or future products which Essentus licenses separately.
1.10 "Workaround" means a change in the procedures followed or data
supplied by Licensee to avoid an Error without significantly
impairing performance of the Software.
2. STANDARD MAINTENANCE SERVICES FOR ESSENTUS SOFTWARE
2.1 In consideration for the annual maintenance fee Essentus will
provide, during its Hours of Operation, First Line Support and
Telephone Support (which may be provided via email or FAX at
Essentus' option) for the software described in the attached
schedules. Essentus shall not be required to provide support
for use of Third Party Software covered by this Agreement
except so far as the Third Party Software is used with the
Software.
2.2 Essentus will answer reasonable questions relating to the use
of the Software, providing that such can reasonably be replied
to by telephone and that such are not in lieu of appropriate
training.
--------------------------------------------------------------------------------
Page 1 of 4
<PAGE> 20
2.3 In consideration for the Annual Maintenance fee listed below, Essentus
will provide Updates upon their general availability.
3. ERROR CORRECTIONS
During the term of this Agreement, Essentus shall use its commercially
reasonable efforts to correct or provide a Workaround for any
reproducible programming Error in the Essentus Software attributable
to Essentus with a level of effort commensurate with the severity of
the Error, provided that Essentus shall have no obligation to correct
all Errors in the Essentus Software. Upon identification of any
programming Error, Licensee shall notify Essentus support of such
Error and shall provide Essentus with enough information to locate the
Error. Essentus shall not be responsible for correcting any Errors
not attributable to Essentus. Errors attributable to Essentus shall be
those that are reproducible by Essentus on unmodified Essentus
Software. Errors attributable to modifications made to the Software
(whether or not made by Essentus) or Third Party Software not
expressly covered by this Agreement or misuse of the Essentus Software
will be billed at Essentus' standard support rates then in effect.
4. SOFTWARE SUPPORTED VERSIONS
Essentus will provide support for both the Current Release and the
immediately Previous Release of the Software. Essentus will also
provide Licensee with one year's notice of its intention to
discontinue support for a particular release.
5. EXTENDED MAINTENANCE SERVICES
"Extended 724 Maintenance" consists of Telephone support provided
seven (7) days a week on a 24 hour basis. Fees for this additional
service shall be as described in a Schedule to this Agreement.
6. LICENSEE RESPONSIBILITIES
6.1 Licensee Assistance. Licensee agrees to provide Essentus
reasonable access to all necessary personnel to answer
questions about any problems reported by Licensee regarding
the Software. Licensee also agrees to promptly implement all
Error corrections provided by Essentus under this Agreement.
6.2 Remote Access. Licensee shall provide Essentus with the
necessary remote access as stipulated by Essentus to
Licensee's designated CPU so that Essentus may provide
maintenance services. Essentus cannot provide or guarantee
performance of the maintenance services described herein
unless such remote access is provided by Licensee.
6.3 Contact People. Licensee shall appoint two (2) individuals
within Licensee's organisation who are knowledgeable in the
operation of the Software to serve as primary contacts between
Licensee and Essentus and to receive support through Essentus'
telephone support center. All of Licensee's support inquiries
shall be initiated through these contacts.
--------------------------------------------------------------------------------
Page 2 of 4
<PAGE> 21
7. EXCLUSIONS
Essentus is not required to provide support under this Agreement for
problems arising out of (i) Licensee's failure to implement all Fixes
to the Software which are issued under the Agreement; (ii) any
alterations or additions to the Software performed by parties other
than Essentus; (iii) interconnection of the Software with other
software products not supplied by Essentus.
8. OTHER SERVICES
In the event that Licensee requires or requests other services
including additional user education and training, implementation
assistance, installation training or hardware reconfiguration not
covered by the original license agreement, such services will be
provided in accordance with Essentus' then prevailing standard per
diem rates.
9. OTHER CONDITIONS
9.1 Maintenance does not include the following items listed below.
Fees for these services will either be charged on a time and
material basis or on an agreed fixed fee basis per item.
9.1.1 Modifications required by governments, such as tax
changes to reflect tax changes by any government
authority.
9.1.2 Errors caused by hardware malfunctions, data
corruption and operating system related errors and
problems, unless such can be reasonably handled by a
single telephone call.
9.1.3 Errors and problems resulting from not maintaining
adequate back-up, unless such can be reasonably
handled by a single telephone call.
9.1.4. User education and training unless such can be
reasonably enabled by a single telephone call.
9.1.5. Consultation over hardware and for new programs or
modifications to existing programs.
9.1.6. Site visits.
9.2 It will be Licensee's responsibility to verify the result of
all program corrections made by Essentus to assure that all
calculations and data resulting from these corrections are
correct.
9.3 Essentus will not be liable or responsible for any losses or
damages whatsoever which might at any time result from or
arise from the use or operation of the programs covered under
the Agreement, or the services provided herein.
9.4 The system as well as the corrections made under this
Agreement shall at all times remain the property of Essentus.
It is understood and acknowledged that the systems,
specifications and any corrections contain information and
programming techniques developed by Essentus which Licensee,
by its acceptance shall agree not to divulge or in any other
way grant to a third party, without the express prior written
consent of Essentus.
--------------------------------------------------------------------------------
Page 3 of 4
<PAGE> 22
10. TERM AND TERMINATION
Support shall be provided for five (5) years from the Effective Date
("Initial Term") and shall be automatically extended further to the
Initial Term for additional one (1) year terms unless terminated by
either party by giving at least 60 days notice prior to the end of the
Initial Term or renewal terms.
Either party may terminate this Software Support Agreement at the end
of the Initial Term or at the end of any renewal term by giving the
other party written notice at least sixty (60) days prior to the end of
any such term. In the event Licensee fails to make payment pursuant to
the Agreement or Section 11 below, or in the event Licensee materially
breaches any of the provisions herein described and such breach has not
been cured within thirty (30) days of receipt of notice of breach,
Essentus may suspend or cancel support services.
11. FEES AND PAYMENTS
11.1 For each designated site utilizing Essentus Software,
Licensee shall pay Essentus the support fee for the
designated term as described in the attached
schedule. Support fees are billed on an annual basis,
payable in advance.
11.2 Should Licensee purchase additional Essentus Software
or additional concurrent user licences then the
additional support fees will be as per additional
schedules.
11.3 Support for modifications and customizations to the
Essentus Software (including those made by Essentus)
shall be in addition to the support under this
Agreement and billed at Essentus' standard support
rates then in effect.
12. GENERAL
12.1 The terms and conditions of all subsections set forth
under the section heading miscellaneous in the
License Agreement are herein incorporated by
reference and apply this agreement as if recited at
length.
12.2 These terms and conditions state the entire agreement regarding
Essentus' provision of support services to Licensee and may be amended
only by a written amendment set forth on a separate document executed
by authorised representatives of both parties.
--------------------------------------------------------------------------------
Page 4 of 4
<PAGE> 23
SCHEDULE "A"
ESSENTUS INTERNATIONAL INC.
ESSENTUS SOFTWARE SUPPORT AGREEMENT
SOFTWARE INCLUDED IN SUPPORT AGREEMENT
<TABLE>
<S> <C>
Licensee: McNaughton Apparel Group Agreement Reference Number:
------------------------ -------------------------
</TABLE>
Licensed Software
1. The Essentus Software listed in Exhibit 1.3 to the License Agreement.
2.
3.
4.
5.
6.
7.
8.
9.
10.
The above software is licensed for a maximum of 85 named users, subject to
increase to a maximum of 250 named users upon payment of the amount due on the
Balance Date referred to in Exhibit 3.4 to the Licence Agreement.
Support Option (Hours of Support):
Standard 513 [X]
Extended 724 [ ]
TERM
This Agreement shall be for a Initial Term of five (5) years. The annual
support charge payable in advance shall be for each period of one year.
<TABLE>
<S> <C>
Rate: 16%
----- ---
Annual Maintenance Fee payable during the Initial Term: $193,600*
------------------------------------------------------- ---------
FIVE YEAR MAINTENANCE FEE: $968,000*
-------------------------- ---------
</TABLE>
1.1.1.1 * Licensee shall pay $126,400 on account of the first year's Annual
Maintenance Fee upon execution of the License Agreement. If Essentus does not
receive the Abatement Notice on or before the Notification Date in accordance
with Exhibit 3.4 of the License Agreement, then a balance of $67,200 multiplied
by the number obtained by dividing (i) the number of days remaining in the first
year of the Initial Term on the Balance Date by (ii) 365, payable on account of
the first year Maintenance Fee, shall be due and payable to Essentus on the
Balance Date mentioned in Exhibit 3.4 of the Licence Agreement.. If Essentus
receives the Abatement Notice in accordance with the said Exhibit 3.4, then the
Annual Maintenance Fee payable by Licensee during the Initial Term shall be
$126,400 ($632,000 for the entire Initial Term) notwithstanding any other
provision of the Support Agreement or this Schedule "A".
Initials
--------------------------------------------------------------------------------
Page 1 of 1
<PAGE> 24
SCHEDULE "B"
ESSENTUS INTERNATIONAL INC.
STANDARD PER DIEM RATES
Essentus fees for services will be on a time and material basis at the
following daily rates based on an eight hour day.
<TABLE>
<S> <C>
Project Manager $2,400
Lead Analyst $2,400
Senior Business Analyst $2,200
Intermediate Business Analyst $1,800
Business Analyst $1,200
Senior Technical Analyst $1,800
Technical Analyst $1,600
Software Development Manager $1,800
Senior Software Developer $1,600
Intermediate Software Developer $1,400
Software Developer $1,200
Technical Installation Analyst $1,600
Installation Consultant $1,200
Data Base Administrator $1,800
Executive $2,800
</TABLE>
These rates are valid through December 31, 2000, and are subject to change on
an annual basis.
Out-of-pocket travel and other disbursements will be charged monthly as
incurred.
All time and material charges and disbursements are payable monthly upon
receipt of invoice.
Applicable taxes will be added to above amounts.
Initials
------------------------
------------------------
--------------------------------------------------------------------------------
Page 1 of 1
<PAGE> 25
EXHIBIT 3.4
PAYMENT SCHEDULE
LICENSEE: McNaughton Apparel Group Inc.
-------------------------------------------------------
<TABLE>
<S> <C>
1) Essentus License fees are payable as follows:
a) Upon contract signing $200,000
b) 90 Days from the Effective Date $200,000
c) Balance due on the Balance Date (as defined below) $300,000
2) Third Party Software License charges are payable as follows:
a) Upon contract signing $94,900
b) Balance due on the Balance Date (as defined below) $66,000
</TABLE>
3) All applicable taxes will be added to the above amounts. For purposes
of this Exhibit 3.4, "Balance Date" means (i) the day which is 45 days
following implementation of the Software for Licensee's Miss Erika
division; or (ii) December 31, 2000, whichever is earlier.
Notwithstanding Exhibit 1.3 or this Payment Schedule, Licensee shall be excused
from paying the installments mentioned in 1) b) and 2) b) above if Essentus
receives written notice (the "Abatement Notice") not less than three (3) days
prior to the Balance Date (the "Notification Date") from a senior officer
certifying that Licensee shall not at any time implement or use the Software or
any part thereof for any division other than its Miss Erika division (the
"Licensed Division") without the prior written consent of Essentus and on such
terms as Essentus in its sole discretion may determine. In such case, (i) the
total License fee for the Essentus Software shall be deemed to be $400,000; (ii)
Licensee shall not pay for and Essentus shall not be required to deliver the
additional 165 Named User licenses for Third Party Software; (iii) the number of
Named Users for the Essentus Software shall be 85; and (iv) Licensee shall limit
its use of the Software exclusively to the Licensed Division: Any other use of
the Software shall be cause for immediate termination of the License Agreement
by Essentus without regard to Section 6.1.1.1 thereof but subject to Essentus'
right to claim damages. Licensee's right pursuant to this clause shall
automatically lapse and this clause shall cease to have any effect if Essentus
does not receive the Abatement Notice prior to 5:00 p.m. (EST) on the
Notification Date. For convenience, allocation of the License fees is set out in
the table below:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
FEE DESCRIPTION DUE ON CONTRACT SIGNING DUE 90 DAYS FROM THE DUE ON THE BALANCE DATE
EFFECTIVE DATE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Essentus Software $ 200,000 $ 200,000 $ 300,000
----------------------------------------------------------------------------------------------------------------------------------
Number of Named Users 85 0 165
----------------------------------------------------------------------------------------------------------------------------------
Third Party Software
----------------------------------------------------------------------------------------------------------------------------------
Business Intelligence Bundled w/ S&D $ - $ - $ -
----------------------------------------------------------------------------------------------------------------------------------
Business Intelligence Bundles ($5925 ea) $ 59,250 $ - $ -
----------------------------------------------------------------------------------------------------------------------------------
Oracle Licenses* $ 35,650 $ - $ 66,000
----------------------------------------------------------------------------------------------------------------------------------
Subtotal Third Party Licenses $ 94,900 $ - $ 66,000
----------------------------------------------------------------------------------------------------------------------------------
2. Total Licenses $ 294,900 $ 200,000 $ 366,000
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Annual maintenance for Third Party Licenses (subject to adjustment by
third party licensors):
Business Objects: 20%
Oracle: 16%
* Note: Oracle pricing is dependent on hardware related minimums. This number
must be finalized after hardware is selected. Oracle pricing is to the best
knowledge of Essentus on the date hereof and is subject to adjustment by Oracle,
and Licensee agrees to pay any difference from the pricing set out in this
License Agreement.
Initials
----------------------------------
----------------------------------
--------------------------------------------------------------------------------
Page 1 of 1
<PAGE> 26
[ESSENTUS LOGO]
creating value at web speed
ESSENTUS SERVICES AGREEMENT
THIS AGREEMENT WILL ENTER INTO EFFECT
UPON SIGNATURE OF BOTH PARTIES
MCNAUGHTON APPAREL GROUP INC.
<PAGE> 27
ESSENTUS INTERNATIONAL INC.
Services Agreement
Contents
1. Services Agreement
2. Terms And Conditions
3. Exhibit 1.10 - Specifications Of Additions To Essentus Software
4. Exhibit 2.3.1 - Software Specifications Approval Letter
5. Exhibit 4.4.1 - Payment Schedule
--------------------------------------------------------------------------------
Page 1 of 1
<PAGE> 28
ESSENTUS INTERNATIONAL INC.
1430 Broadway, 14th Floor
New York, New York 10018
ESSENTUS SERVICES AGREEMENT
The Licensee identified below ("Licensee") and Essentus International Inc.
("Essentus") have entered into this Services Agreement (the "Agreement") as of
the Effective Date set forth below.
Licensee Name: McNaughton Apparel Group Inc.
---------------------------------------------------
Billing/Notice Address: 463 Seventh Avenue
---------------------------------------------------
New York, NY 10018
---------------------------------------------------
Attn: Don George
---------------------------------------------------
Telephone/Fax: (212) 947-2960 ext. 350
---------------------------------------------------
Effective Date:
---------------------------------------------------
Agreement Reference Number: S-
--------
This Cover Page and the attached Services Terms and any duly initialled Exhibits
thereto (including without limitation Exhibit 1.10 - Modified Software
Specifications; Exhibit 2.3.1 - Software Specifications Approval Letter; Exhibit
4.4.1 - Payment Schedule) are incorporated into and made a part of this
Agreement as of the Effective Date set forth above. In the event the Effective
Date is not identified above, the Agreement shall be effective as of the last
date of signature of the parties hereto. Additional documents, schedules,
exhibits and addenda may be incorporated into and made a part of this Agreement
upon the written consent of the parties.
The parties hereby acknowledge that they have read and understand this Agreement
and all exhibits and addenda hereto, and agree to all terms and conditions
stated herein and attached hereto.
<TABLE>
<S> <C>
ESSENTUS INTERNATIONAL INC.: LICENSEE:
By: /s/ Scott D. Miller By: /s / Amanda Bokman
----------------------------------------- --------------------------------------
Name: Name:
----------------------------------------- --------------------------------------
Title: Title:
----------------------------------------- --------------------------------------
Date: Date:
----------------------------------------- --------------------------------------
</TABLE>
--------------------------------------------------------------------------------
Page 1 of 1
<PAGE> 29
ESSENTUS INTERNATIONAL INC.
ESSENTUS SERVICES AGREEMENT
TERMS AND CONDITIONS
1. DEFINITIONS
In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the expressions following shall have the
meanings indicated below.
1.1 "ACCEPTANCE" as defined in section 2.3.1.
1.2 "AGREEMENT" means this Services Agreement, including all
exhibits hereto and which may hereafter be added hereto with
the consent of Licensee and Essentus.
1.3 "APPLICATION SPECIFIC THIRD PARTY SOFTWARE" means Third Party
Software license through Essentus which may solely be used by
Licensee in conjunction with the Essentus Software.
1.4 "DOCUMENTATION" means the documentation for the Essentus
Software and the Modified Software to be provided by Essentus
to Licensee with the Essentus Software and Modified Software
under this Services Agreement.
1.5 "EMPLOYEES" means employees, agents, subcontractors and
consultants of Essentus or Licensee, as the case may be.
1.6 "GRACE PERIOD" means the thirty (30) days following delivery
of the Essentus Software to Licensee.
1.7 "HARDWARE" means the computer hardware, peripherals and
operating system software provided by or for Licensee,
consisting of a single C.P.U. or network of united C.P.U.'s at
a single location.
1.8 "LICENSE" means the rights and licenses granted by Essentus
under Section 4.2.1, subject to the license exclusions as set
forth in Section 4.5.
1.9 "MODIFIED SOFTWARE" means any additions, changes,
modifications or enhancements made by Essentus to the Essentus
Software to perform in accordance with the Modified Software
Specifications. The Modified Software includes Documentation
provided by Essentus.
1.10 "MODIFIED SOFTWARE SPECIFICATIONS" means the system design
specifications for the Modified Software as agreed upon by
Essentus and Licensee and which shall, upon completion, be
appended to this Agreement as Exhibit 1.10.
1.11 "ESSENTUS SOFTWARE" means the software licensed under the
Essentus Software License Agreement.
1.12 "ESSENTUS SOFTWARE SPECIFICATIONS" means the system design
specifications for the Essentus Software. Title to copyright
in and all other rights to the Essentus Software
specifications are and remain with Essentus.
1.13 "SERVICES" means either fixed price or time and material
services (or both), as described in this Agreement and to be
paid for as described in Exhibit 4.4.1.
1.14 "SOFTWARE" means the Essentus Software, together with any
Third Party Software, and the Modified Software, collectively.
1.15 "SYSTEM DESIGN SPECIFICATIONS" means the Modified Software
Specifications and the Essentus Software Specifications,
collectively.
1.16 "THIRD PARTY SOFTWARE" means the third party software programs
in object code format only, including any accompanying
documentation, utilized in conjunction with the Software.
1.17 "WARRANTY PERIOD" means the sixty (60) day period commencing
after the Grace Period.
--------------------------------------------------------------------------------
Page 1 of 10
<PAGE> 30
2. DESCRIPTION OF SERVICES PROVIDED BY ESSENTUS
2.1 Additions to Essentus Software
2.1.1 The consulting, design, additions, modifications
and/or implementation services to the Essentus Software are to
be considered to be an extension, enhancement of the Essentus
Software and, therefore, both the Essentus Software as
separately licensed to Licensee and the Modified Software are
owned by Essentus and licensed on a non-exclusive basis to
Licensee.
2.1.2 Essentus may provide assistance to Licensee to review
the System Design Specifications of the Essentus Software with
Licensee's management and staff assigned to the project.
Software additions requested by Licensee to the Essentus
Software will be specified in detail by Essentus.
2.2 Development of System Design Specifications
2.2.1 Essentus may provide Modified Software Specifications
which will include the following elements:
2.2.1.1 Automated procedures to be followed in
each application area.
2.2.1.2 Specifications of all data input
required for the system.
2.2.1.3 The design of the output records
and reports pertaining to the
system. This would include the
design of the layouts required
for inquiry purposes.
2.2.1.4 Design of the data base.
2.2.1.5 The computer logic for the customized
systems to be automated including details
of any special calculations required.
2.3 System Development Services
2.3.1 As required to meet the needs of Licensee following
the review contemplated by Section 2.1, Essentus may provide
programming services in accordance with the Modified Software
Specifications following the written approval by Licensee of
the Modified Software Specifications in the form attached as
Exhibit 2.3.1, which approval shall constitute Acceptance of
the Modified Software Specifications.
2.3.1.1 Programming of additional software would be
done in accordance with the approved
Modified Software Specifications. All
programming services to the Essentus
Software would have been requested in
advance by Licensee, and incorporated in the
Modified Software Specifications. Any
programming services requested by Licensee
thereafter will be subject to agreement
between Essentus and Licensee as to price,
terms of payment and schedule of
modifications if applicable.
2.3.1.2 All programs will be tested and debugged to
the extent possible in a test environment.
This would entail the establishment of
suitable test data by the Licensee which
would test for all reasonably possible
conditions and for the detection of all
reasonably possible errors.
2.3.1.3 If requested by Licensee, a programming
demonstration will be conducted for
Licensee's personnel. Utilizing test data,
the programs will be run in a manner to
simulate actual live operations. This will
enable Licensee's staff to verify the
accuracy of the programming and will provide
initial training on the operation of the
system prior to the parallel run and live
operations.
2.4 Implementation Services
2.4.1 Essentus may assist Licensee in implementation, as
requested by Licensee, as follows:
2.4.1.1 Data Conversion
Essentus may assist Licensee to the extent
commercially reasonable in the conversion of
data to the
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<PAGE> 31
new system. It will be the responsibility of
Licensee to verify the accuracy of all
converted data.
2.4.1.2 Computer Print Forms
Essentus will, together with Licensee's
forms printer, determine the content of
computer forms required for input and
output. Cost of documents and forms will be
borne by Licensee and ordered directly from
Licensee's printer. Licensee will
pre-approve all forms.
2.4.1.3 Application Training
Licensee will designate personnel who will
receive direct instructions from Essentus on
use of each program, including daily,
weekly, monthly and yearly procedures, so as
to become internal trainers for Licensee's
employees.
2.4.1.4 Parallel Run
Licensee shall continue its existing systems
for a sufficient period of time after
implementation of the new system, so that
Licensee's management will have a basis of
comparison to verify results and assure
integrity of the new system. Should any
problems arise, Essentus, if requested, will
cooperate with Licensee's management and
staff to assist in the resolution of
problems.
3. PARTICIPATION BY LICENSEE
3.1 Licensee acknowledges that joint participation of both
Essentus and Licensee is critical to the success of the project and
that Licensee's cooperation is essential to such success. Specific
areas of responsibility of Licensee shall include:
3.1.1 Making available to Essentus, knowledgeable employees
and staff of Licensee as well as management personnel to
discuss the concepts of the Software and its design, and to
grant necessary approvals of all new procedures, forms and
reports prior to programming.
3.1.2 Providing representative transactions to be used as
test data.
3.1.3 Balancing and verification of input to and from the
computer.
3.1.4 The establishment of a Systems and Procedures
Committee consisting of members of Licensee's management team
and staff assigned to the project. Responsibilities of the
Committee would include
3.1.4.1 discussion of system concepts and design
including procedures, forms and reports
prior to implementation by Essentus.
3.1.4.2 review of problems which may arise prior and
subsequent to implementation.
3.1.4.3 approval of revisions to the system should
they be required subsequent to
implementation.
3.1.5 Granting of approvals to Essentus at each stage of
development and implementation of Modified Software, in a
timely manner.
3.1.6 Verification of all calculations, and accuracy of all
reports.
3.1.7 Following and abiding by Licensee's established and
to be established internal controls and procedures required
for an automated systems environment.
3.1.8 Providing a proper physical environment for the
Hardware in accordance with the manufacturer's recommendation.
3.1.9 Designating a specific representative of Licensee
with responsibility to coordinate internal activities prior to
delivery of Hardware and during the implementation stages of
the Software. Such responsibilities shall include
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3.1.9.1 supervision of the gathering of test data
for program testing.
3.1.9.2 preparation of site for Hardware.
3.1.9.3 approving, ordering and providing
preprinted computer forms.
3.1.9.4 supervision of gathering of data in
preparation for data conversion.
3.1.9.5 supervision of loading of data and
verification of information during data
conversion.
3.1.9.6 scheduling of personnel for training.
3.1.9.7 supervision of parallel runs and data
verification.
3.1.10 Training of responsible individuals and designating
them for assumption of the following responsibilities:
3.1.10.1 control of all input and output
transactions to the system.
3.1.10.2 enforcing all manual and operating
procedures and disciplines required to
operate each system. 3.1.10.3 scheduling
all work for the computer system.
3.1.10.4 supervision of data input clerks and
operators.
3.1.10.5 daily back-up of the system.
3.1.10.6 following appropriate procedures
should problems arise relating to the
system.
3.1.10.7 verifying the accuracy of all
calculations, data and reports.
4. TITLE, LICENSE AND FEES
4.1 Title
4.1.1 All rights, title and interest in the Software,
(other than title and interest in the rights of Third Party
Software suppliers), and in any updates, modifications,
enhancements, and additions thereto, as may be provided from
time to time by Essentus, without obligation, as well as all
copyright, patents, trade secrets and other intellectual
property rights therein, shall belong to Essentus. All risk
for loss prior to delivery of Software prior to installation
shall be borne by Essentus. The Software is supplied by
Essentus F.O.B. Essentus premises. Upon delivery of the
Software to a common carrier, Licensee shall have all
responsibility for all risk of loss of, or damage to the
Software and shall arrange for all policies of insurance in
respect thereof. Nothing in this Agreement shall be construed
as transferring to Licensee any rights, title or interest in
the Software or any right other than pursuant to the License
herein granted.
4.2 License
4.2.1 As long as Licensee is not in default, Essentus shall
grant to Licensee a perpetual, non-exclusive, non-revocable
(save in the case of default), non-transferable license
without right of sublicense to use the Modified Software in
object code format, subject to the provisions of this
Agreement.
4.2.2 Licensee may use the Modified Software for as long as
it desires for its intended use within its own company on the
initial Hardware or, with the written consent of Essentus, on
any upgraded or replacement hardware. Licensee shall take all
reasonable steps to protect the proprietary nature of the
Modified Software and shall not copy, disclose or allow use of
the Modified Software or any part thereof for any purpose
whatsoever other than as is necessary in the performance of
its normal business. Licensee shall not:
4.2.2.1 permit any third party to use the Modified
Software;
4.2.2.2 use the Modified Software in the operation
of a service bureau or to assist any third
party.
All applicable patents, copyrights, trademarks, trade
secrets and intellectual rights in the Software and any
updates, modifications or enhancements made by Licensee or
Essentus are and shall remain the property of Essentus.
4.2.3 Licensee shall not sell, transfer, distribute,
market, rent, lease, publish, display or otherwise make
available the Software or Documentation to others. Licensee
agrees to secure and protect the Modified Software and
Documentation and copies in a manner consistent with the
maintenance and protection of Essentus's rights therein and to
take appropriate action by instruction or agreement with its
Employees or others who are permitted access to the Modified
Software and to each program or software application. All
copies of the Modified Software made by Licensee and other
programs developed, including all corrections, modifications,
improvements, enhancements or derivatives of the Software made
by or for Licensee, translations, compilations and partial
copies, as well as all copyright, patents, trade secrets and
other
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<PAGE> 33
intellectual property rights therein are the property of
Essentus. Licensee is permitted to make copies of the Modified
Software for back-up and archival purposes only.
4.3 No Rights Prior to Payment
4.3.1 Notwithstanding the foregoing Licensee shall have no
right to use, other than for purposes of testing and training,
any component of the Software until it has paid for each such
component in accordance with the provisions of this Agreement.
4.4 Fees and Limitations on Use
4.4.1 In consideration for Essentus undertaking to perform
the services contemplated hereby, Licensee shall pay the fees
and amounts at the times set forth in Exhibit 4.4.1 hereto.
4.4.2 All amounts owed under this Agreement shall be due
and payable within thirty (30) days of the date of Essentus's
invoice. Overdue payments shall bear interest at the lesser of
one and one half percent (1.5%) per month, or the maximum rate
allowed under applicable law.
4.4.3 Essentus reserves the right to include means within
the Software to limit Licensee's use of the Software to the
Licensed number of simultaneous users. Licensee shall maintain
records regarding Licensee's use of the Software and shall
make such information available to Essentus upon request and
such records shall be subject to audit by Essentus on
reasonable notice to Licensee.
4.5 License Exclusions
4.5.1 Except as expressly authorized herein, Licensee shall
not:
4.5.1.1 reverse compile, reverse assemble,
disassemble, translate or otherwise reverse engineer
all or any portion of the Software;
4.5.1.2 disclose the results of Software performance
benchmarks to any third party without Essentus's
prior written consent;
4.5.1.3 use or permit the use of the Software by
more than the maximum number of simultaneous users in
respect of which Licensee is paying License fees.
5. GENERAL
5.1 Implementation
5.1.1 The successful implementation of a data processing
system requires discipline within Licensee's organization.
Turnover of key staff prior to and during the initial
installation may cause the transition period from the old to
the new system to be more difficult and costly. It could also
result in additional fees should it become necessary for
Essentus to familiarize the new individuals with the system.
5.2 Parallel Run
5.2.1 The installation of a new data processing system
requires that for each new application being implemented, the
old system be run in parallel until such time that Licensee's
management is satisfied with the accuracy of the new system.
It is the responsibility of Licensee's management to satisfy
itself that the Software is satisfactory and suitable for its
business purposes before the Software is run in a live
environment. Licensee acknowledges that the period during
which the parallel runs take place creates an extra work load
on Licensee's staff and could result in overtime and extra
staff costs.
5.3 Internal Controls
5.3.1 It is Licensee's responsibility to exercise all the
internal control procedures required in a computer
environment. Internal control procedures must be exercised
over such areas as computer input, computer output,
segregation of duties, approval, etc. Licensee acknowledges
that internal control cannot totally eliminate the possibility
of fraud or embezzlement.
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<PAGE> 34
5.4 Substitutions and Modifications
5.4.1 Essentus reserves the right to make substitutions and
modifications to the Software that do not materially adversely
affect the performance of the Software.
5.5 Taxes
5.5.1 Licensee shall pay or reimburse Essentus upon demand
for any and all applicable state, federal, and/or local taxes
howsoever designated arising from or based upon the fees
charged by Essentus including any sales and/or use tax, value
added tax, property tax, (excluding only taxes based on
Essentus's taxable income) and related interest and penalties,
if any, imposed by any taxing authority at any time.
5.6 Confidentiality
5.6.1 Essentus and Licensee agree to treat and to cause
Essentus Employees and auditors and Licensee's Employees and
auditors respectively to treat as confidential any and all
information which they may communicate to one another from
time to time during the term of this Agreement regarding the
conduct of their respective businesses including but not
limited to the terms and conditions of this Agreement and any
Addendum, Amendment, Exhibit, Schedule and documentation
thereto and each of Essentus and Licensee undertakes not to
use for itself or disclose any such information to any other
person, firm or corporation.
5.7 Essentus Employees
5.7.1 Licensee agrees not to hire, directly or indirectly,
any Essentus Employees during the term of this Services
Agreement or for a period of one year after the last work is
completed under this Agreement. If Licensee does employ,
either directly or indirectly any such individual, then in
order to compensate Essentus for the costs of training and
acquiring such personnel, Licensee agrees to pay to Essentus a
fee equivalent to one year compensation of the Essentus
Employees so hired. Such sum will be by way of liquidated
damages and shall be due and payable upon the termination of
such person's employment or service with Essentus.
5.8 Binding Effect
5.8.1 This Agreement shall be binding upon and shall enure
to the benefit of the parties hereto and their respective
heirs, representatives, successors, executors, administrators
and permitted assigns.
6. WARRANTIES AND LIMITATIONS OF ESSENTUS LIABILITY
6.1 Specific Warranties and Limitation of Warranties
6.1.1 EXCEPT AS EXPRESSLY PROVIDED IN THIS SECTION 6,
ESSENTUS MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. THE
FOLLOWING WARRANTIES ARE IN LIEU OF THOSE ARISING BY STATUTE
OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF
TRADE.
6.1.2 Essentus cannot guarantee a specific result, an error
free system or a specific cost saving. Essentus does not
warrant that the operation of the Software will be
uninterrupted or error free or that all software errors will
be corrected. Licensee agrees to assume these risks as to the
result including the responsibility for testing and
implementing the Software.
6.1.3 In the event that during the Warranty Period any
Modified Software errors shall appear, provided such program
errors are a deficiency of the Modified Software to perform
materially in accordance with the Modified Software
Specifications, Essentus will use commercially reasonable
efforts to correct any such deficiencies in the Modified
Software.
6.1.4 Essentus does not warrant the Software against faulty
performance due to operator errors, power failures, file
overflows, equipment malfunctions, failure of operating
systems, failure of compilers or interpreters, failure of
utilities or of software not authored (written) by Essentus or
any other causes beyond the reasonable control of Essentus.
Licensee shall pay Essentus's standard rates for services
performed by Essentus to correct such data and/or program
defects.
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<PAGE> 35
6.1.5 The responsibility of Essentus under this Agreement
shall be limited to commercially reasonable efforts to correct
defects in the Modified Software if informed of defects by
Licensee during the Warranty Period. Any claim by Licensee
that a defect exists in the Modified Software shall not excuse
Licensee from the performance of its obligations under this
Agreement.
6.1.6 ESSENTUS DISCLAIMS ANY AND ALL LIABILITY FOR
INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDING LOSS
OF PROFITS, REVENUE, DATA, OR USE INCURRED BY LICENSEE OR ANY
THIRD PARTY ARISING OUT OF THE USE OR OPERATION OF THE
SOFTWARE PROVIDED TO LICENSEE WHETHER IN AN ACTION FOUNDED IN
CONTRACT, TORT OR OTHERWISE, EVEN IF THE OTHER PARTY OR ANY
OTHER PERSON HAS ADVISED ESSENTUS OF THE POSSIBILITY OF SUCH
DAMAGES. ESSENTUS'S LIABILITY FOR DAMAGES HEREUNDER FOR ANY
CAUSE WHATSOEVER SHALL IN NO EVENT EXCEED THE AMOUNTS RECEIVED
FROM LICENSEE WITH RESPECT TO THE PARTICULAR SOFTWARE MODULE
WHICH GIVES RISE TO THE LIABILITY OR IN THE AGGREGATE, THE
AMOUNTS RECEIVED BY ESSENTUS FOR THE MODIFIED SOFTWARE. THE
FEES PROVIDED FOR THIS AGREEMENT REFLECT THE ALLOCATION OF
RISKS AND THE LIMITATION OF LIABILITY SPECIFIED HEREIN WHICH
BOTH PARTIES HEREBY AGREE TO.
6.1.7 If Licensee without the consent of Essentus makes any
modifications to the Software or any deviations from the
operating instructions, all warranties set forth herein cease
immediately. In addition, Essentus's support as contracted for
separately shall only apply to unaltered or original Software
as may be modified or altered only by Essentus.
6.1.8 Essentus warrants that it is the owner of the
Software and has the right to License the Software to Licensee
(subject to the rights of Third Party Software suppliers).
Licensee shall give Essentus prompt notice of any claims that
the Software infringes any patent, copyright or trade secret
("Infringement Claim"). If so notified, Essentus shall, at its
expense, defend any action brought against Licensee to the
extent that it is based on an Infringement Claim arising from
Licensee's use of the Software within the scope of this
Agreement. In the event that the Software becomes, or in
Essentus's opinion is likely to become, the subject of an
Infringement Claim, Essentus may either
6.1.8.1 procure for Licensee the right to continue
using the Software free from any such claims;
6.1.8.2 replace or modify the Software to make the
Software non-infringing, or
6.1.8.3 if neither 6.1.8.1 or 6.1.8.2 is
commercially reasonably available to Essentus,
require Licensee to discontinue using the infringing
Software upon thirty (30) days written notice
provided Essentus refunds to Licensee the then
present value of all amounts paid by Licensee with
respect to the infringing Software, as amortized over
a forty-eight (48) month life.
If the Infringement Claim relates only to Third Party Software
not licensed through Essentus, Essentus shall have no
liability whatever as regards such Third Party Software.
The foregoing states Essentus's entire liability with respect
to any Infringement Claim.
6.1.9 Essentus does not represent or warrant that:
6.1.9.1 The Essentus Software remedies Year 2000
compliance issues that may otherwise affect
Licensee's computer or information systems; or
6.1.9.2 The services described in the Agreement can
be provided in time to resolve or remedy Year 2000
compliance issues that may currently be affecting
some of Licensee's computer or information systems.
Licensee assumes this risk associated with 6.1.9.1 and 6.1.9.2
above and full responsibility for ensuring that an alternative
plan is in place in the event that the Essentus Software is
not functional on Licensee's system in time for potential Year
2000 related issues.
7. TERMINATION
7.1 Events Giving Rise to Termination
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<PAGE> 36
7.1.1 Either party may immediately terminate this Agreement and
shall have no further obligations to the other party under this
Agreement other than the obligations of Licensee to make all payments
contemplated hereby to Essentus, if any one of the following events
shall have occurred and provided such termination is permitted by law.
7.1.1.1 A party shall fail to observe or perform any material
covenant or agreement contained in this Agreement and such
party does not cure such failure within the one hundred and
twenty (120) day period after written notice thereof has been
given to that party by the other party;
7.1.1.2 The other party:
7.1.1.2.1 is dissolved;
7.1.1.2.2 becomes insolvent or fails or is unable or
admits in writing its inability generally to pay its
debts as they become due;
7.1.1.2.3 makes a general assignment, arrangement or
composition with or for the benefit of its creditors;
7.1.1.2.4 institutes or has instituted against it a
proceeding seeking a judgement of insolvency or
bankruptcy or any other relief under any bankruptcy
or insolvency law or other similar law affecting
creditors' rights, or a petition is presented
for the winding-up or liquidation of such other party
and, in the case of any such proceedings or petition
instituted or presented against it, such proceeding
or petition
a) results in a judgement of insolvency or
bankruptcy or the entry of an order for
relief or the marking of an order
for the winding-up or liquidation of such
other party, or
b) is not dismissed, discharged, stayed or
restrained in each case within thirty (30)
days of the institution or presentation
thereof;
7.1.1.2.5 has a resolution passed for its winding-up
or liquidation;
7.1.1.2.6 seeks or becomes subject to the appointment
of an administrator, receiver, trustee, custodian or
other similar official for it or for all or
substantially all its assets (regardless of how brief
such appointment may be, or whether any other event
described in this Section 7.1.1.2.6 has occurred and
is continuing;
7.1.1.2.7 has any event occur to it with respect to
such other party which, under the applicable laws of
any jurisdiction, has an analogous effect to any of
the events specified in Sections 7.1.1.2.1 to
7.1.1.2.6. (inclusive); or
7.1.1.2.8 takes any action in furtherance of, or
indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts.
7.2 In the event Licensee fails to make any payment pursuant to
the Agreement, Essentus may suspend or terminate this Agreement.
7.3 Upon termination of this Agreement by Essentus pursuant to
Article 7, Licensee shall discontinue all use of, and promptly return
all copies of the Software and Documentation in Licensee's possession.
7.4 Notwithstanding any termination of this Agreement, the
following Sections shall continue to apply: Sections 4.1.1, 5.7.1,
5.8.1 and Article 6.
8. MISCELLANEOUS
8.1 Notice
8.1.1 Any notice or other communication required or
permitted in this Agreement shall be in writing and shall be
given by certified mail or in person to the address set forth
on the cover page of this Agreement.
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<PAGE> 37
Such notice shall be deemed effective on the day of delivery, if
delivered in person, or on the third day after being placed into the
mails if given by certified mail.
8.2 Integration
8.2.1 This Agreement, including the Exhibits and schedules
hereto, constitutes the entire Agreement between the parties
with respect to the subject matter hereof and supersedes all
prior proposals, negotiations, conversations, discussions, and
agreements between the parties concerning the subject matter
hereof. Nothing herein shall be deemed to contradict or modify
the Essentus Software License Agreement previously executed
between the parties.
8.3 Conflict and Exhibits
8.3.1 Except as otherwise provided, in the event of a
conflict between the provisions of any Exhibit or schedule and
the provisions set forth in the body of this Agreement, the
provisions of the body of this Agreement shall prevail, unless
the Exhibit specifically indicates that the provision in the
Exhibit should control and such Exhibit is signed by both
parties.
8.4 Amendments
8.4.1 No amendment, modification, termination or waiver of
any provision of this Agreement, nor consent to any departure
therefrom, shall be effective unless the same shall be set
forth on a separate document in writing, executed by
authorized representatives of both parties, and then such
waiver or consent shall be effect only in the specific
instance and for the specific purpose for which given.
8.5 Applicable Law
8.5.1 This Agreement shall not be governed by the
provisions of the 1980 United Nations Convention on Contracts
for the International Sale of Goods. Rather this Agreement
shall be governed by the laws of the State of New York.
Subject to Section 7.6. Any legal proceedings arising out of
or relating to this Agreement shall be brought in the state
courts located in Manhattan County or in the federal district
courts for the Southern District of New York.
8.6 Arbitration
8.6.1 Any controversy or claim arising out of or relating
to this Agreement shall be submitted to arbitration before an
arbitrator agreed upon by the parties, or if the parties
cannot agree upon an arbitrator within thirty (30) days, to
three arbitrators selected by the American Arbitration
Association. Notwithstanding the foregoing, however, the
parties agree that either party may seek injunctive or similar
indirect relief pending such arbitration from any court of
competent jurisdiction as may be appropriate. The site of the
arbitration shall be New York, New York, and the arbitration
shall be conducted under the rules then prevailing of the
American Arbitration Association. The arbitrators may award
attorney's fees and costs as part of the award. The award of
the arbitrators shall be binding and may be entered as a
judgement in any court of competent jurisdiction.
8.7 Invalidity
8.7.1 If any provision or portion of this Agreement is held
to be invalid under any applicable statute or rule of law it
is to that extent to be deemed to be severable and omitted and
the remainder of this Agreement shall continue in full force
and effect.
8.8 Waiver
8.8.1 No waiver of any breach of this Agreement shall
operate as a waiver of any similar subsequent breach or any
breach of any other provision of this Agreement.
8.9 Force Majeure
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8.9.1 Neither party shall be liable or deemed to be in
default for any delay or failure in performance under this
Agreement or interruption of service resulting directly or
indirectly from Acts of God, civil or military authority, acts
of public enemy, war, riots, civil disturbances, accidents,
fire, explosions, earthquakes, floods, the elements, strikes,
lockouts, labor disturbances, shortages of suitable parts,
labor or transportation, delays caused by suppliers,
telecommunications, courier or postal failure or interruption
or any other cause beyond the reasonable control of such party
8.10 Export
Licensee shall not export or re-export the Software or
Documentation except in compliance with United States export
laws and regulations.
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<PAGE> 39
EXHIBIT 1.10
MODIFIED SOFTWARE SPECIFICATIONS
LICENSEE: McNaughton Apparel Group Inc.
Initials
-----------------------------------
-----------------------------------
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<PAGE> 40
EXHIBIT 2.3.1
SOFTWARE SPECIFICATIONS APPROVAL LETTER
Dear
We have examined the System Design Specifications dated _______________________
and hereby confirm that all the specifications meet the requirements of
____________________________________ . It is understood that changes to the
specifications could result in additional systems design and programming
charges.
SIGNED:
------------------------------------
McNaugton Apparel Group Inc.
DATE:
-----------------------------
Initials
------------------------------
------------------------------
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Page 1 of 1
<PAGE> 41
SCHEDULE 1
PAYMENT TERMS
1) Essentus charges for Services described herein will be on a time and
material basis at the following daily rates based on an eight hour day:
<TABLE>
<CAPTION>
Regular Per Diem Discount Per Diem
---------------- -----------------
<S> <C> <C>
Project Manager $2,400 $2,360
Lead Analyst $2,400 $2,200
Intermediate Business Analyst $1,800 $1,400
Senior Technical Analyst $1,800 $1,800
Data Base Administrator $2,200 $2,200
Training $2,400 $2,000
Lead Business Analyst $2,400 $2,400
Senior Business Analyst $2,200 $2,200
Business Analyst $1,200 $1,200
Technical Analyst $1,600 $1,600
Software Development Manager $1,800 $1,800
Senior Software Developer $1,600 $1,600
Intermediate Software Developer $1,400 $1,400
Software Developer $1,200 $1,200
Technical Installation Analyst $1,600 $1,600
Executive $2,800 $2,800
</TABLE>
These rates are valid through December 31, 2000, and are subject to
change on an annual basis.
2) Training Services
Essentus offers education classes per the Essentus Course Catalog.
<TABLE>
<S> <C>
a) Training conducted at a Essentus site $350 per student per day
b) Training conducted at client site $2,400 per day
(for first 8 students)
$250 per each additional
student (maximum 12)
c) Special Training
</TABLE>
<TABLE>
<CAPTION>
Audience Days Needed Full Rate Discount Rate
-------- ----------- --------- -------------
<S> <C> <C> <C>
Technical Staff - Data Model 2 $ 4,800 $ 4,000 (REQUIRED TRAINING)
Technical Staff - SQL 4 $ 9,600 $ 8,000 (Optional Training)
Technical Staff - PL/SQL 3 $ 7,200 $ 6,000 (Optional Training)
All - Oracle Overview 2 $ 4,800 $ 4,000 (Optional Training)
Management - Team Building,
Customer Service 5 $12,000 $10,000 (Optional Training)
</TABLE>
3) The rates herein are valid through December 31, 2000, and are subject
to change on an annual basis.
4) Any specific additional requests of McNaughton Apparel Group Inc. for
other Essentus Services will be set out in a separate schedule to this
Schedule 1 and will be detailed thereon as to cost and payment terms.
<PAGE> 42
5) Out-of-pocket travel and other disbursements will be charged monthly as
incurred and are payable monthly upon receipt of invoice.
6) All applicable taxes will be added to the above amounts.
Initials
-------------------------------
-------------------------------
<PAGE> 43
ADDENDUM
ADDENDUM TO THE SOFTWARE LICENSE AGREEMENT (THE "LICENSE AGREEMENT") AND TO THE
ESSENTUS SERVICES AGREEMENT (THE "SERVICES AGREEMENT") BETWEEN ESSENTUS
INTERNATIONAL INC. ("ESSENTUS") AND MCNAUGHTON APPAREL GROUP INC. ("LICENSEE"),
HAVING THE EFFECTIVE DATE OF MAY 24, 2000. THIS ADDENDUM IS INCORPORATED INTO
AND MADE PART OF THE LICENSE AGREEMENT AND SERVICES AGREEMENT AS OF THE SAID
EFFECTIVE DATE.
License Agreement
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The License Agreement is hereby amended as follows:
1) Section 1 is hereby amended as follows:
i) In subsection 1.5, in the definition of "Grace Period", replace the
reference to "thirty (30) days" with a reference to "sixty (60)
days".
ii) In subsection 1.10, add the following words at the end of the
definition of "Software": ",as updated and corrected from time to
time."
2) Section 2.1.2 is hereby deleted and replaced with the following:
"2.1.2 Essentus does not represent or warrant that:
2.1.2.1 The Essentus Software remedies Year 2000 compliance issues
that, independent of the Essentus Software, may otherwise
affect Licensee's computer or information systems; or
2.1.2.2 Any of the services to the Essentus Software described in
2.1.1 above can be provided to resolve or remedy Year 2000
compliance issues that may be affecting some of Licensee's
current computer or software information systems.
Licensee assumes the entire risk associated with 2.1.2.1 and 2.1.2.2
above and assumes full responsibility for ensuring that an
alternative plan is in place in the event that the Essentus Software
is not functional on Licensee's system due to Year 2000 related
issues.
2.1.3 Subject to Section 2.1.2, Essentus represents that the Essentus
Software will accurately process 4 digit date information,
excluding any data which is produced independent of the Essentus
Software, whether by any other software, firmware or hardware."
3) In Section 3.1.1, second sentence, delete and replace the words "Upon
delivery of the Software to common," with the words "Upon delivery of
the Software to Licensee,".
4) In Section 3.4.3, delete and replace the second sentence with the following:
"Licensee's use of the Software shall be subject to audit by Essentus on
reasonable notice to Licensee and Licensee shall provide to Essentus such
assistance and records as Essentus" may reasonably request to conduct such
audit."
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5) In Section 4.1.1, delete and replace the first sentence with the following:
"Essentus recommends and Licensee acknowledges that for each new application
of the Software being implemented, Licensee's existing system should be run
in parallel until such time that Licensee's management is satisfied with the
accuracy of the new system, and that it is Licensee's entire responsibility
to conduct and manage such parallel run(s)."
6) In Section 5.1.3, second sentence, add the following words after the words
"commercially reasonable efforts":"as soon as is practicable".
7) In Section 5.1.9.2, add the following closing words: "provided that the
replaced or modified software shall have functionality which is substantially
similar to the infringing Software."
8) In Section 5.1.9.3, replace the word "present" with the word "unamortized",
and the reference to "forty-eight (48) month" with a reference to "sixty (60)
month".
9) In Section 6.1.1.1, add the following words: "provided that following any
such termination by Licensee, Licensee shall not be required to make any
further payments on account of the License fees contemplated hereby."
10) The following is added as new Section 7.12:
"7.12 Source Code Escrow
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Essentus agrees to deposit in escrow the source code for the Essentus
Software delivered under this Agreement pursuant to a Software Escrow
Agreement acceptable to the parties to be concluded forthwith. All
costs and expenses of maintaining the source code escrow shall be
borne by Licensee. The Escrow Agreement shall provide that Licensee
shall be entitled to access the escrowed source code for its own
internal use only following termination of the License Agreement by
Licensee pursuant to Sections 6.1.1.2.1, 6.1.1.2.4 or 6.1.1.2.5, as a
result of the business failure of Essentus. In the event that either
party terminates the License Agreement for any reason other than
pursuant to any of the aforesaid Sections, the Software Escrow
Agreement shall immediately terminate and the escrowed source code
shall be immediately returned to Essentus."
11) Without limiting the generality of Section 7.11 of the License Agreement,
Licensee agrees that Essentus may issue a press release announcing the
Software License Agreement made between Licensee and Essentus and selected
particulars (excluding financial terms). Furthermore, Licensee agrees to
host up to 5 site visits by Essentus and prospective licensees from time to
time following implementation of the Essentus Software, it being understood
that each such visit would occur during Licensee's regular business hours
following prior notice from Essentus of not less than 2 business days.
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Services Agreement
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The Services Agreement is hereby amended as follows:
12) The following paragraph is added to Section 2.3.1:
"Essentus agrees that the Modified Software Specifications shall include its
estimate of the labour cost of providing the related services. Essentus
undertakes to advise Licensee as soon as it becomes aware that it has reached
75% of such estimate. In the event that Essentus exceeds such estimate by more
than 20%, any services thereafter provided by Essentus to complete the project
in accordance with the unmodified Modified Software Specifications shall be
invoiced to Licensee at Essentus' direct labour cost.
13) Section 4.4.1, together with the related Schedule, are hereby deleted.
14) Sections 1.6, 1.14, 6.1.9, 4.1.1, 4.4.3, 5.2.1, 6.1.3, 6.1.8.2, 6.1.8.3 and
7.1.1.1 of the Services Agreement be and they are hereby amended such that
the said sections contain amendments which are identical to those made by
this Addendum to corresponding Sections 1.5, 1.10, 2.1, 3.1.1, 3.4.3, 4.1.1,
5.1.3, 5.1.9.2, 5.1.9.3 and 6.1.1.1 of the License Agreement.
General
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15) Where not otherwise in this Addendum, capitalized terms used herein shall
have the meaning set forth in the License Agreement or the Services
Agreement, as the case may be.
16) All other terms and conditions of the License Agreement and the Services
Agreement shall be and remain in full force and effect.
ESSENTUS INTERNATIONAL INC. McNAUGHTON APPAREL GROUP INC.
By: /s/ [SIG] By: /s/ [SIG]
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Name: /s/ SCOTT D. MILLER Name: [SIG]
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GENERAL COUNSEL
Title: Title: VP, CFO, SEC'Y & TREAS.
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Date: May 24, 2000 Date: 5/24/00
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